Petroleum minister M Veerappa Moily has made it clear that once the Election Commission lifts its model code of conduct on May 12, the last of polling for the 10-phase general election, its order for the deferment of a new gas pricing regime based on the Rangarajan formula will cease to exist and a price hike would come into effect.

He also hinted that the revised price — which would work out to around $8/mmBtu against the current $4.2 — would have retrospective validity from April 2014.

“When the proposal came to me, I rightly ordered that after the model code of conduct is lifted, price may be announced for the July-September quarter, 2014, and also for the April-June quarter, 2014, as per the approved guidelines by the Cabinet Committee on Economic Affairs,” he said.

The minister hit back at Communist Party of India leader Gurudas Dasgupta, who had alleged that the minister had favoured Reliance Industries by announcing a hike in natural gas price as per the Rangarajan formula. He said the revised pricing guidelines will be applicable to all kinds of natural gas including those produced from the NELP blocks which are being operated by various entities such as * Oil & Natural Gas Corpn ,OIL, GAIL, RIL, BP and Niko.

“Around 65% of the gas is produced by public sector companies and the remaining 35% by private or joint venture companies. RIL’s production constitutes only about 15% of the country’s total gas output. Therefore, the largest beneficiaries of the increased gas price are the public sector companies. As such, allegations that these decisions are intended to favour a particular company, namely RIL, are totally misplaced, he said.

At the price of $4.2 per mmBtu, many projects have been found commercially unviable and the declaration of commerciality in some fields in the KG and the Cauvery basins are held up due to non-viability at this price, said the minister. “The upstream oil and gas industry is inherently risky due to geological and technological imponderables, as operators are required to risk investing huge amount of money under conditions of uncertainty,” he said.

“Therefore, they need to be adequately compensated so that they are encouraged to invest,” he added. The minister reiterated that it was during the NDA regime when Mukesh Ambani-led RIL entered into the production sharing contract for the KG D6 block.